Co-pay Vs. Co-insurance-understanding The Difference

Health care changes that are due to take effect could be a good thing or be really bad, depending on the individual status of everyone. Perplexing confusion could easily consume the faint of heart trying to adjust to these changes in health care. It is common knowledge of the unavoidable rise in health care costs of the future. While this can be devastating to many, employers and insurance companies will be implementing sneaky ways to pay for these changes.

To try to meet the demand for affordable health care for the masses, many health insurance companies and employers will have to revamp the books and policies to give unsuspecting policy holders the impression that every thing health care is fine and dandy on the home front, until the fine print is read and understood. You will discover the rate increase is minor, while the benefits lost is major.

One very clever way that health insurance companies will be hiding the increased costs of your health insurance plan is by changing your co-pay amount to a co-insurance amount of about the same number but when you do the math you can very easily see how this will affect you. Understanding the differences is important when looking at your benefits for the coming year because these two things are very different.

Co-pay is just a industry term for a flat fee the policy holder is expected to pay for services received by health care professionals or facilities. 25 can mean most anything until you assign a value to it by a % or $. If last years co-pay was $25, you pretty much know what your out of pocket expenses would be. Not change the $ sign to a % and you have a 25% co-insurance. This simply means that whatever the amount of the total bill is, your part of the bill is 25%: or $25 on a $100 bill; $250 on a $1000 bill. The difference in the amounts of a co-insurance is very noticeable over a co-pay amount and very deceptive if you don't catch this small change in the policy.

While co-payments are predictable and a preset flat fee, co-insurance is a percentage and can add up to be quite a bit more expensive especially when dealing with specialists and special treatments. Making sure that you understand the difference between these two types of insurance plans before making your selection can really help you to save a lot of money and headaches.

Co-pay insurance appears to offer better coverage with expected manageable out of pocket expense. If this is offered as an alternative by your health insurance policy, it will be a wise choice to choose it over the co-insurance plan. Always read the fine print of any policy and ask questions to help fully understand what you are buying.